MINNEAPOLIS (AP) - The shock waves from the collapse of commodities trading firm MF Global Inc. are hitting hard across rural America, where farmers, ranchers and agricultural business owners are nervously waiting to learn how much money they've lost.
Many of the farmers who traded with MF Global, which is being investigated over what federal regulators say is an estimated $1.2 billion that may be missing from customer accounts, used the futures markets to reduce the risks of volatile prices. Locking in prices through the futures market - something farmers have been doing for a century - allows them to plan ahead while knowing what their costs will be.
Mike Mouw, co-owner of Mouw's Feed and Grain Inc. in the southwestern Minnesota town of Leota, said his business relies on the futures markets both when it buys grain from farmers and when it sells feed to hog producers. That makes it possible to for the company to plan two or three years ahead. Now, though, Mouw estimates he's out about $250,000.
"I'm praying that I get it back," he said.
Farmers, ranchers and rural businesses such as grain elevators and feed mills were among the hardest hit when they were cut off from the cash in their hedging accounts at MF Global, which sought bankruptcy protection in October after making a disastrous bet on European government debt. The number of people harmed and the extent of their losses isn't clear yet.
The House Ag Committee expects to be the first to hear from Jon Corzine, the former Chief Executive officer of MF Global. The committee has scheduled a full committee hearing for Dec. 8 to examine the MF Global bankruptcy. The House Ag Committee has put teeth in its request by issuing a subpoena to compel the attendance of Corzine. The Senate Ag Committee has set a similar hearing for Thursday, Dec. 13.